Brexit, Blockchain and borders: Fantasy or Reality?

In the run up to a pivotal moment in our country’s history, it’s only to be expected there will be a growing sense of urgency, political drama and blanket media and social media coverage. Brexit, with it’s all encompassing remit, is definitely living up to this.

Time is running out
Political jousting from all parties, including the now defunct UKIP, has been the norm since negotiations began last year, with new revelations taking the spotlight every week. Currently it’s Irish border backstop an issue which has been there from the beginning. With less than six months to go before Brexit, the fact that it remains unresolved speaks volumes about the enduring complexity of this situation in itself.

How do you solve a problem like the Irish border?

The Irish border has become controversial. Both the UK and the EU do not want a ‘hard border’ dividing the island of Ireland for obvious reasons – peace, freedom of movement and a lucrative trading relationship.

The Financial Times reported that Ireland has €65bn of annual trade with Britain. According to Parliament research papers, in 2016, the UK had a trade surplus of £12bn with Ireland – having a ‘hard border’ post Brexit may put a lot of this at stake.

Theresa May’s Chequers plan proposes a new all-UK customs union with the EU to take effect if no other solution can be found. Michel Barnier, the EU negotiator rejected this proposal on the basis it undermines the principles of the existing EU Customs Union.

To avoid a hard border, both sides need to agree a backstop in the event that an alternative longer term solution cannot be found.

The longer term solution

The complexities of border trading have come into sharp focus. Both sides have put forward numerous proposals ranging. From staying in the Customs Union, to performing the customs checks away from the border, to technological solutions as suggested by the Chancellor of the Exchequer.

Technology
Is Blockchain the way to solve this complex issue? This emerging technology underpins cryptocurrency transactions and offers a transparent and immutable record of the movement of goods from start to finish. This has great potential to enable an easy and objective way of applying checks and taxes for goods between the UK and the EU and removing/minimising the need for custom checks at or away from the border.

Throwing in some ‘Smart Contracts’ into the mix (which are essentially codes in the Blockchain that executes an action when pre-defined conditions are met), we may have the future of an invisible customs border. But how far into the future are we talking about?

Too much too soon?
In an ideal world, this technology will be easily and readily accessible and maintained by all parties and businesses on either side. But in reality, we are more than an 18-month transition period away from widespread understanding and application of Blockchain.

The flaws in the ability of Blockchain to solve the border issue have been argued by many. It’s an incredibly uneven playing field too. Small to medium sized businesses may find it less accessible than larger firms, and as it is not yet a globally accepted and trusted technology there will be resistance due to a lack of understanding and the necessary regulations required to ensure it is robust.

While Blockchain does not address some of the key political questions of whose Rule Book will be applied in Northern Ireland and to what extent it applies to the rest of the UK, there is potential but not in the short term.

So, how do you solve a problem like the Irish border?

While all bets are off right now, and that may change in the immediate future, the race is on.

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Luuk Jacobs 65

I think it is definitely not reality yet i.e. I can see the benefits of blockchain for data as they form one record of for example a trade of a security. With goods you can create also the associated data stream of the good (where it was produced, how it was shipped and any other step within the value chain till it reaches consumer. The big difference with goods is as I understand that this blockchain of data needs in some way to be associated with the unique good/product. Yes you can add small and cheap electronic devices to a good and create the link withers blackchin data. the challenge will be that this device remains connected to the unique good and is not prone to fraud .... Or am I missing something

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With the decorations up, the last order date for Amazon nigh and most of us looking forward to at least a few days break, it’s always a good time to take stock of what’s been achieved over the last 12 months.

For AlgoMe this has been another exciting year.

January started in style with the launch of the AlgoMe Careers mobile app – giving professionals the opportunity to find their next career opportunity on the move.

Then in July we released our Industry Pulse Report – a check on what the industry was thinking about key topics such as Brexit, Pay Gap Reporting, MiFiD II and GDPR. Unfortunately it seems that the uncertainty that the industry was feeling due to Brexit is unlikely to have receded in the intervening period, but it’s good to see progress starting to be made in other areas such as gender and diversity.

In September we launched AlgoMe Community – a place for the Investment / Asset Management industry to come together, providing professionals with ways to grow their knowledge, profile and network. We’d like to say a big thank you to all of the members that have joined and contributed and look forward to continuing growth in 2019.

In November AlgoMe joined the Investment Association, becoming a Fintech member and working closely with Velocity, the Association’s new Fintech accelerator. This is a really exciting initiative and we’re looking forward to doing more with Velocity in the near future.

We also launched our Mentoring matching service in November – designed to help AlgoMe Community members connect with the best individuals within the community to help them to reach their career goals using a simple but intelligent process. If you haven’t already signed up to be a mentor or a mentee, please do spend 5 minutes now and tick off a New Year’s Resolution early.

As we go into the end of the year, we have also launched our survey on Investment Management, Fintech and the future of careers. The impact of Fintech on the industry is going to accelerate rapidly in 2019, but what has been less well documented is the impact on individuals, their careers and the skills they’ll need to succeed in a more digitised environment. We really value the input of our community members, so please spend a couple of minutes filling out the survey and we’ll make sure you’re the first to hear the results early next year.

From me and the AlgoMe team, I wish you all a very happy holiday season and look forward to another year of exciting announcements and change in 2019.

Rob

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I have always struggled to see a fair reason why employers should be allowed to ask about a potential hire’s current remuneration, other than to give them an advantage in pay negotiations.
It’s something which can only exacerbate existing pay inequalities and it’s abolishment can surely only be a positive thing.
Here the Guardian argues specifically about its impact with regards to the gender pay gap:
https://www.theguardian.com/commentisfree/2018/aug/23/gender-pay-gap-current-salary-question
I believe this has already been outlawed in some US states?
@Jonathan Max - would be interesting to hear the view from HR.

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The Investment Association recently gave the industry a boost when it announced the launch of Velocity, its FinTech accelerator. Designed to identify, develop and accelerate best in class firms with innovative solutions, Velocity will champion and facilitate the wider adoption of technology across the industry.

And AlgoMe will be involved in this too, which is why I’m excited to announce we are now a member organisation of the Investment Association as an official FinTech member and have been named a "company to watch" by Velocity.

Challenging Times
The Investment Management industry faces major challenges and opportunities from forces such as digital technology, pressure on fees and increased regulation, while at the same time there are widespread changes in the workforce and their expectations.

To date, Investment Management has both been fairly insulated from the challenges posed by agile FinTech competitors, but also distant from the opportunities offered by the new technologies and ways of thinking that such companies bring.

Bringing FinTech closer
Velocity is a fantastic step towards accelerating the adoption of FinTech. It has received support and endorsements from both inside and outside the industry, including from the Chancellor of the Exchequer, Phillip Hammond, who was enthusiastic about the initiative at a recent City event.

To drive change and innovation, the industry needs to connect across different disciplines and areas of expertise, driving new ways of thinking and fostering cultural change.

Without the benefit of emerging FinTechs and their external expertise, it will be hard for incumbents to harness the benefits of emerging technologies such as Straight Through deal Processing (STP), Distributed Ledger Technology (DLT), and Artificial Intelligence (AI) in areas such as risk and compliance, securities trading and investment decision making.

Our Mission
AlgoMe's mission is to connect the Investment Management industry and empower professionals to manage their careers. Our new product, AlgoMe Community, is placed to become the hub for the discussion between FinTechs and the companies and professionals in the wider Investment Management ecosystem.

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The FCA outlined earlier this week, through the voice of CEO Andrew Bailey, the blueprint of the regulator's approach post-Brexit. In short - the way I read it - the FCA will aim to regulate towards outcomes in line with the European standards ("no race to the bottom") while operating with a hands' off approach ("principles and outcome based"). This is a very tight rope to walk ... Indeed, as I see it, the future UK regulation will need to be aligned with the European one, to ensure continuation of fluid collaboration and cooperation (the Europeans were quite clear on that matter during the Brexit talks), which the FCA is keen to deliver on. At the same time, the FCA seems to be responding to clamours of "too-much-regulation," which emerges regularly from some ranks of the Investment Management industry. I take the view that the FCA post-crisis approach - in line with most European regulators - has been to influence the resolution of issues that our industry is struggling to cope with on its own: Investor protection, transparency on costs, adequate governance models, conduct standards, diversity models and so on. This, to me, amounts to influencing a change of culture in our industry (which does not mean questioning the raison-d'être of the industry, i.e. increase the value of capital entrusted to us). Anyway, ten years of post-crisis regulation has brought some constructive changes to the industry, and some challenges, too, but I am not sure all has been achieved; it takes time to undertake a culture change as ambitious as the one we are tackling. As such, I find it risky that the FCA should lift their foot from the pedal so soon. In my opinion, the odds are high that the industry reverts to pre-crisis behaviours, if the regulator is already signalling that they will relax their grip on execution. I really want to hope that a change in approach will get to the ambitious outcomes that the industry needs, but we have been there before and failed to deliver. What would be different this time?

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